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New York PIP Insurance Update: Is New York’s No-Fault Crisis Solved? Insurance Information Institute June 2, 2005 Robert P. Hartwig, Ph.D., CPCU, Senior.

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Presentation on theme: "New York PIP Insurance Update: Is New York’s No-Fault Crisis Solved? Insurance Information Institute June 2, 2005 Robert P. Hartwig, Ph.D., CPCU, Senior."— Presentation transcript:

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2 New York PIP Insurance Update: Is New York’s No-Fault Crisis Solved? Insurance Information Institute June 2, 2005 Robert P. Hartwig, Ph.D., CPCU, Senior Vice President & Chief Economist Insurance Information Institute  110 William Street  New York, NY 10038 Tel: (212) 346-5520  Fax: (212) 732-1916  bobh@iii.org  www.iii.org

3 NY PIP UPDATE Is New York’s No- Fault System Truly Under Control?

4 NY PIP Claim Frequency & Severity, ( 2000:04 – 2004:04) Sources: Insurance Information Institute based on ISO Fast Track data. NY PIP: An incredible success story! Severity down 32% since 2002:03; Frequency down 21% since 2000:04

5 PIP Average Claim Severity: New York State vs. US* *ISO Fast Track PIP data as of 2004:Q4 include the following states: FL, HI, KY, KS, MA, MI, MN, NY, ND, SC and UT. Source: Insurance Information Institute calculations based on ISO Fast Track Data. NY PIP claim severity is now lower than the US average

6 PIP Pure Premium: New York State vs. US* *ISO Fast Track PIP data as of 2004:Q4 include the following states: FL, HI, KY, KS, MA, MI, MN, NY, ND, SC and UT. Source: Insurance Information Institute calculations based on ISO Fast Track Data. Change Since 2000:4 NY: -44% US: +23%

7 PIP Pure Premium: New York State vs. US* *ISO Fast Track PIP data as of 2004:Q4 include the following states: FL, HI, KY, KS, MA, MI, MN, NY, ND, SC and UT. Source: Insurance Information Institute calculations based on ISO Fast Track Data. NY PIP frequency remains above the US average, but is down 21% since 2000:Q4

8 New York Insurance Fraud Reports, 1995 - 2004 Source: New York Department of Insurance, Insurance Frauds Bureau Annual Report; Insurance Info. Institute. Number of No-Fault related fraud reports remains high but is beginning to fall No-fault fraud reports fell 17% in 2004

9 No-Fault Related Arrests by NY Insurance Fraud Bureau *Data through August 2003. No-fault unit was merged with auto unit, separate no-fault arrest data no longer available. Source: New York Department of Insurance, Insurance Frauds Bureau Annual Report; Insurance Info. Institute.

10 Population of New York’s Auto Insurance Plan* *Plan policies in force as of December 31 of each year. Source: New York Auto Insurance Plan, AIPSO; Insurance Information Institute. The population of New York’s pool for high-risk drivers dropped by 36.4% from year-end 2002 through year-end 2004. The trend continues in 2005.

11 A SCARY TRIP DOWN MEMORY LANE (Nightmare in Brooklyn)

12 Growth in Total PIP Claims Costs* *Change in “pure premium” Source: Insurance Information Institute from ISO Fast Track Data PIP Claims Costs PIP Costs in New York grew faster than in any other no-fault state—by far. Four Quarters Ending 2000:4th

13 PIP Fraud and Abuse in New York State

14 *Through 4 quarters ending 2000:3 rd. Source: American Insurance Association/ISO FastTrack; Insurance Information Institute Change in PIP Loss Costs: New York vs. US:1987-2000* By 2000, growth in New York PIP loss costs were more than twice (121%) the national average.

15 New York Other No-Fault States* * Excluding Michigan Average PIP Claim PIP Claim Severity 1995-2000: New York vs. United States Source: Fast Track Monitoring System, Fourth Quarter 2000 Report

16 Impact on Cost of Auto Insurance in New York State

17 Projected Average Auto Insurance Expenditure in NY State Assuming No Meaningful Reform (Jan. 2002 Est.) Source: Insurance Information Institute

18 Projected Average Cost of No-Fault Auto Insurance Fraud in NY State Assuming No Meaningful Reform (Jan. 2002 Est.) Source: Insurance Information Institute Cost per Vehicle

19 What’s Left to be Done? NYIA: The Battle on Insurance Fraud is Far From Over Decertify Fraudulent Providers  Still no way to decertify health care providers who commit no-fault fraud Increase Penalties for Runners Repeal Presbyterian Hospital Case  Law should acknowledge that cases of suspected may require more time to investigate; Need exception to 30-day rule. Enact “File & Serve” Legislation  Require filing of summons before serving summons. Allows large numbers of suits to be filed Restore Flex Rating  Helps insurers deal with loss cost fluctuations, including those due to fraud and abuse Source: New York Insurance Association

20 Insurance Information Institute On-Line If you would like a copy of this presentation, please give me your business card with e-mail address

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